Reinvest income to increase total returns

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Dividend reinvestment is when an investor uses their dividend distributions to purchase additional shares in that company. Often the long term benefits for an investor can be better served by reinvesting their dividends rather than taking the dividend as a small cash payment once or twice a year.

Reinvesting dividends can provide a considerable boost to total returns over the long term thanks to the power of compound interest.

It is vital that as an investor you remain patient and disciplined if you want to achieve an attractive total return. One of the most underestimated factors in long term performance and growth is “time in the market”.

Dividend-paying stocks can help protect against the erosive effects of inflation, with regular dividend payments often reflecting stability in a company’s share price.

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